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9th December 2014

Singapore Real Estate

Further declines predicted
for private home prices and rents in 2015

Prices of private condos could drop by another 5-10
per cent next year, consultants predict, as it looks unlikely that the measures
designed to cool down the property market would be tweaked or lifted soon.
However, the price tags on new sales could be "stickier" because
developers have strengthened their holding power.

Hong Leong group
tops sales ladder

Its 1,370 new homes sold bring in $1.4b in
slowing market

Source: Straits Times / Money

CITY Developments and its parent Hong Leong Group have sold more
properties than any other developer in a lacklustre market, moving 1,370 new
homes so far this year.

The group easily topped the chart for residential sales in Singapore,
even as it eyes more projects overseas. Far East Organization, which has often
been the top seller, is second.

The Hong Leong group, led by tycoon Kwek Leng Beng, said the units it
has sold brought in more than $1.4 billion as of last Friday.

The sales came mostly from projects such as the 944-unit Coco Palms in
Pasir Ris, the 616-unit Jewel @ Buangkok, and The Venue Shoppes &
Residences, a mixed development.

A Hong Leong group spokesman said "the Singapore residential
property market has slowed because of the series of property cooling
measures", leading to a smaller group of eligible buyers as well as lower
transaction volumes and prices.

Despite those challenges, he said "the group's properties that were
launched this year have sold well due to their good location... and profits
have been locked in".

The group's total unit sales are almost double those of Far East
Organization, which sold a total of 517 residential units with a sales value of
more than $628 million as of last Friday.

Its sales were mainly from developments such as the 495-unit RiverTrees
Residences in Fernvale Close and the 630-unit Q Bay Residences in Tampines - a
joint project with Frasers Centrepoint and Sekisui House.

Another big player, CapitaLand, sold 237 residential units with a total
sales value of $444 million, as at Sept 30.

A more current update is not available.

The sales were mainly from projects such as the 1,715-unit d'Leedon in
Farrer Road (designed by architect Zaha Hadid), the 1,040-unit The Interlace in

Alexandra, and the 694-unit Sky Vue in Bishan.

R'ST Research director Ong Kah Seng said developer sales have been
discouraging this year.

Urban Redevelopment Authority monthly developer sales data for landed
and non-landed units in the first 10 months of this year shows developers sold
6,705 private residential units.

Mr Ong expects developers to sell fewer than 8,000 units for the entire
year, adding that this figure pales in comparison with the 14,948 units sold
last year, and the 22,197 units sold in 2012.

Mr Ong said: "With savvy investors continuing to hold a strategic
and cautious outlook for private residential properties in Singapore, we can
expect developers to continually cut prices going into the first half of
2015."

He also said that if cooling measures were to be lifted, it would take
place only from the second half of next year, "when demand and prices are
significantly worsened and when interest rates might possibly rise, which will
discourage excessive buying even if cooling measures are lifted".

OWNERS of bigger Housing Board flats will enjoy a reduction in property
taxes next year.

This comes as the estimated annual market rents of properties, or annual
values (AVs), will be lowered by about 3 per cent on Jan 1, to reflect the
weakening rental market, said the Inland Revenue Authority of Singapore (Iras)
yesterday.

The lowering of AVs means owners residing in three-, four-, five-room
and executive flats can save about $12 to $14 in property taxes next year
compared with this year.

Once the changes to property tax rates this year are factored in, owners
living in these flat types will save between $42 and $54 by way of taxes next
year, compared with last year. So, someone living in a three-room flat will pay
between $1.60 and $49.60 next year, versus between $44 and $92 last year.

Under the more progressive property tax structure from the start of this
year, the AV exemption threshold was raised from $6,000 to $8,000 for
owner-occupied homes. This means that property owners who live in their homes
will not have to pay property tax on the first $8,000 of the AVs of their
properties.

Owner-occupiers of one- and two-room flats will continue to be exempt
from property taxes next year. HDB flats which are vacant or not occupied by
their owners will be taxed at a higher rate of 10 per cent of their AVs.

Cab driver Dickson Kwok, who lives in a three-room Toa Payoh flat with
his 72-year-old mother, said the tax savings will help supplement his monthly
income of about $1,800.

The 44-year-old bachelor said: "It may not be a lot of money, but
$54 can buy three days of meals for my mother and me."

The lowered AVs come amid a cooling HDB rental market.

Overall prices slid by 2.1 per cent between October last year and the
same month this year, according to Singapore Real Estate Exchange figures.

A five-room unit in Ang Mo Kio, for instance, had a median rental price
of $2,700 in the third quarter of this year, according to HDB data, down from
$2,800 in the same quarter last year.

Flat owners will receive their property tax notices and bills by the end
of the year, and have to pay up by Jan 31 next year.

Industry observers said property tax for private housing could also be
lowered, given the weak private rental market.

Director of property market research company R'ST Research, Mr Ong Kah
Seng, said: "I would expect that (Iras) would either keep private property
tax flat or adjust it downwards to better reflect the more cautious market
conditions."

HDB
residents will enjoy tax savings of between S$42 and S$54 for 2015 compared to
two years ago, while owners of one- or two-room HDB flats will not have to pay
any property tax at all.

Source: Channel News Asia / Singapore

SINGAPORE: For a second
year in a row, HDB households will see reduced property taxes, the Inland
Revenue Authority of Singapore (IRAS) said on Monday (Dec 8).

The reduced property taxes
kick in from Jan 1, 2015, and HDB residents will enjoy tax savings of between
S$42 and S$54 for the year, compared to two years ago, IRAS said in a news
release.

IRAS said that next year, the
Annual Values (AVs) or estimated annual rent of a property, will be lowered by
about 3 per cent to reflect the dip in market rentals. Property tax payable on
HDB flats is calculated by applying property tax rates on AVs.

Owners residing in three-,
four-, five-room flats and executive flats will enjoy property tax savings of
S$12 to S$14 due to the fall in AVs.

All owner-occupiers of one- and two-room HDB flats will continue to pay no
property tax in 2015.

IRAS said property tax rates
have been made more progressive since this year. Owner-occupiers of HDB flats
paid less property tax compared to 2013, as the first tier of tax-exempt AV was
raised from S$6,000 to S$8,000.

For example, a resident
living in an HDB four-room flat with an annual market rent of about S$10,000
will enjoy a tax exemption for the first S$8,000. A 4 per cent tax rate is
applied to the remaining S$2,000. That means he will pay a property tax of
S$80.

HDB flat owners will receive
their property tax notices and bills by the end of this month and the tax has
to be paid up by Jan 31, 2015. Those who flout the rule, or who have not
arranged to pay their tax by then, will incur a 5 per cent penalty.

Analysts said an increasing
supply of units being put up for rent is one reason why the AVs of properties
will see a dip, and subsequently, lower property taxes. They said such a
situation is also influenced by a slowing resale market.

Mr Bernard Tong, head of
operations at HSR International Realtors, explained: "Basically, you have
a situation where you have many flat owners who are wanting to sell their HDB
flats, but cannot get the prices that they want because the resale prices for
HDB are coming down due to the cooling measures."

"So a lot of them have
decided now to rent out their flats until market conditions improve and
therefore, you have this huge supply of HDB rental flats that is coming into
the market, and this is what is causing the dip in the market rentals. So as
the market rentals fall, the annual market value falls as well, so then you
will be paying lower taxes," he added.

For second year running, lower
property taxes for HDB owners

Source: Today Online / Singapore

SINGAPORE — Housing and Development Board (HDB) flat-owners will
pay lower property taxes next year for the second year running after a dip in
market rentals lowered Annual Values (AVs) by about 3 per cent, the Inland
Revenue Authority of Singapore (IRAS) said yesterday.

The lower property taxes will kick in on Jan 1. Those living in
three-, four-, five-room and executive flats will save S$12 to S$14 in property
taxes, while one- and two-room flat-owner-occupiers will continue to pay no
property tax.

IRAS reviews the AVs, or estimated annual market rent of
properties, including HDB flats, every year. The AVs are used as a basis to
compute payable property tax rates.

IRAS said property tax rates were made more progressive this year,
adding that owner-occupiers of HDB flats paid less property tax this year compared
with last year, as the first tier of tax-exempt AV was raised from S$6,000 to
S$8,000.

HDB flat-owners will receive their property tax notices and bills
by the end of this month. Those who fail to arrange or make payment by Jan 31
will incur a 5 per cent penalty.

Hiap Hoe Group is selling all 48 units in its
District 10 project, Treasure on Balmoral, to avoid paying further extension
fees under the qualifying certificate (QC) rules. It disclosed on Monday that
its controlling shareholder, Hiap Hoe Holdings (the investment firm of the
founding Teo family), has entered into an agreement to acquire all the shares
in Hiap Hoe SuperBowl JV Pte Ltd, which owns the properties, for S$72.83
million after accounting for shareholder loans and other liabilities.

THE
faltering property market has led to a developer selling all the units in a posh
new condominium to its parent company at a discount after other buyers turned
their noses up at the asking price for the apartments.

Mainboard-listed
Hiap Hoe was forced into the unusual move after being caught out in the real
estate downturn while also having to meet the deadline for selling units in a
completed project.

It has been
trying to offload units in the luxury Treasure on Balmoral near Orchard Road
since it launched the high-end project in September 2012 at an initial price of
between $2,044 per square foot (psf) and $2,375 psf.

But it
failed to sell a single apartment.

In October
last year, it appointed marketing agent Savills to sell the entire development
consisting of 103,439 sq ft of total strata area with a guide price of $2,100
psf.

Hiap Hoe
received a number of enquiries but no formal offer.

So it tried
a new gambit in July by lowering its asking price to around $191.4 million or
$1,850 psf.

Again there
were no acceptable offers; the best came in at $181 million.

That left it
in a tricky position. Qualifying Certificate (QC) rules give developers up to
five years to finish building a project and two more years to sell all the
units. Unsold units cannot be rented out.

Treasure on
Balmoral received its Temporary Occupation Permit on Nov 1, 2012 so its
apartments would have had to be sold by Nov 1 this year.

It is buying
all 48 units for $185 million or $1,789 psf - 3.3 per cent below the July price
and about 12.5 per cent to 24.7 per cent below the launch price.

A
back-of-envelope calculation shows that the $1,789 psf price tag works out to a
discount of about 15 per cent to the October guide price of $2,100 psf.

Seen this
way, it could be considered that the developer is absorbing the additional
buyers' stamp duty on behalf of the buyer, based on the October asking price.

The deal,
which is conducted via a share sale of the entity that owns Treasure on
Balmoral, is known as an interested party transaction as Hiap Hoe Holdings is
an investment holding company controlled by Hiap Hoe's executive chairman, Mr
Teo Ho Beng, and its managing director, Mr Roland Teo Ho Kang.

Hiap Hoe did
a similar kind of deal about two months ago when it offloaded some units at its
Skyline 360 and Signature at Lewis projects to a subsidiary when QC rules
started to bite.

"The
group's attempts to sell the properties have been made even more challenging by
the several rounds of cooling measures introduced by the Singapore Government
which have dampened the local property market," the company said in a
statement.

The company
added that foreign buyers, who traditionally make up a majority of the
purchasers of high-end residential developments in prime districts in
Singapore, have likely been deterred by the cooling measures and may have
turned to markets outside Singapore.

It noted
that since it attempted a bulk sale in July, it attracted 45 enquiries and 19
inspections of the properties by developers, funds and other investors.

Market
watchers noted that the deal was not unexpected, given that there are many
high-end properties that are due to be completed or have been completed.

"The
price is fair, it does reflect the current market situation for a bulk deal of
this scale," said JLL Singapore international director Karamjit Singh.

SINGAPORE'S
lacklustre property market showed some signs of life at the weekend but
interest was mainly confined to executive condominiums (ECs)

The best
performer was The Terrace, an EC project in Punggol, where more than 100 units
were sold, out of a total of 747.

But sales at
older launches remained tepid as many potential buyers are on holiday and
sentiment remains poor, experts said.

At The
Terrace, launched on Sunday, prices start at $710 per sq ft for a three-bedroom
unit, a spokesman for developer Kheng Leong said. Unit sizes are from 1,001 sq
ft for three-bedders to 1,711 sq ft for a five-bedroom penthouse.

Three-bedroom
units with views of both the swimming pool and Punggol Waterways were popular,
she added. Buyers were mostly upgraders, and included several young families.

At other
ECs, more than five units in total were sold at Qingjian Realty's Bellewaters
and Bellewoods in the past week.

So far,
about 150 units have been sold at Bellewaters in Sengkang, launched a month
ago. But interest in Bellewoods has been weaker. Sales are understood to be in
the double digits at the Woodlands project, which was launched on Nov 1.

No units
were sold at Lake Life EC in Jurong over the weekend. The project, launched a
month ago, has about 12 unsold units.

As a whole,
the EC market is seeing more activity than the private housing market, said Mr
Donald Han, Chestertons managing director.

While it is
too early to assess the impact of the mortgage servicing ratio - loan
restrictions applying to ECs - the market is still location-specific, he said.

"In
locations where you have first-mover status like Lake Life - the first EC to be
launched in the area after many years - you see pent-up demand. Response to
Bellewoods and Bellewaters has been more muted as there are already other ECs
in the area."

The Amore EC
in Punggol is expected to be launched in January. E-applications start on
Friday.

Sales were
gloomy outside of the EC segment for the weekend, with no sales at the 250-unit
TRE Residences, launched on Nov 15 with about 50 units so far.

Marina One
is also believed to have drawn a blank at the weekend, while three units were
sold at 696-unit Lakeville, which is about 52 per cent sold.

December is
typically a slow month, being holiday season for many people, including
expatriates and permanent residents who could be the target market for some
private condos, said Mr Mohd Ismail, chief executive of PropNex.

GLP's
initial 55% stake in fund set up for acquisition will be cut to 10% later as
part of fund management strategy

Source: Business Times / Companies & Markets

Global Logistic Properties
(GLP) is partnering Singapore's sovereign wealth fund GIC in the US$8.1 billion
purchase of a portfolio of warehouses and distribution centres in the United
States, a move that GLP said would give it "immediate scale" in the
world's largest logistics market.

GLOBAL
Logistic Properties (GLP) will be co-investing with Singapore sovereign wealth
fund GIC to acquire one of the largest logistic real estate portfolios in the
United States for US$8.1 billion (S$10.7 billion), confirming earlier reports
that it would be involved in the deal.

GIC had
announced last week that it and its affiliates were set to buy over warehouse
owner IndCor from private equity giant Blackstone.

IndCor is
reported to have the largest portfolio of wholly owned warehouses and
distribution centres in the US, operating in 29 key markets in 23 states,
including Las Vegas, Seattle, Denver, Houston and Miami.

Analysts had
said that this is a timely investment as demand for such properties is rising,
with retail and e-commerce sales growing fast.

GLP said in
a statement yesterday that the transaction provides it with immediate scale in
the US, the world's largest economy and logistics market, as well as an
experienced local management team that further strengthens GLP's team.

The
transaction is expected to be completed in the first quarter of next year and
GLP will initially hold a 55 per cent stake in the fund, while GIC will hold
the remaining 45 per cent.

GLP will
eventually pare this stake down to 10 per cent after it brings in additional
partners. The eventual stake of 10 per cent represents about US$330 million of
equity, or 4 per cent of GLP's net asset value.

GLP noted
that the US industrial real estate market has been experiencing solid growth
recently.

Lack of
construction over the past five years has led to limited new supply of 0.4 per
cent of total stock per year.

IndCor's
portfolio is 90 per cent leased as of Sept 30. Current rents are estimated to
be 7 per cent below market. GLP's investment is expected to give it a pre-tax
yield of about 9 per cent.

GLP's
co-founder and chief executive Ming Mei said: "This transaction gives us
immediate scale as well as the best team in the US logistics market.

Singapore-listed GLP, which provides logistics facilities
in China, Japan and Brazil, said in a statement it would initially hold a 55
per cent stake in the venture and GIC would take 45 per cent. However, GLP said
it would cut its stake to 10 per cent by August 2015 as it has already received
interest from capital partners looking to invest in the US logistics market.

“This transaction gives us immediate scale as well as the
best team in the US logistics market,” said GLP’s co-founder and CEO Ming Z
Mei. However, while GLP is expanding into other international markets, China
remains its key growth market, he added.

The transaction is expected to be completed in the first
quarter of next year.

Cambridge Industrial Trust is
acquiring a property in Singapore's pioneer business park for S$28 million.
This is the industrial real estate investment trust's first asset in a business
park. Situated at 16 International Business Park in Jurong East, the property
is a three-storey purpose-built building with a mezzanine and a basement
carpark. It has a gross floor area of some 6,434 square metres and a remaining
land tenure of about 41.6 years and is near the Jurong Gateway commercial hub.

FOOD and
beverage counter Yeo Hiap Seng (YHS), which also develops properties, announced
yesterday that its group chief executive, Mr Tjong Yik Min, will retire on
April 30 next year.

Mr Tjong,
62, will be succeeded by Mr Melvin Teo Tzai Win, 43, who will be appointed
executive director and CEO-designate with effect from Jan 1.

Mr Teo will
formally assume the role of group CEO on April 24.

Mr Tjong had
joined YHS as its president and chief operating officer in 2002, and was
appointed to his current position in 2010.

During his
tenure, Mr Tjong led the management team through various milestones to grow the
company's markets in Malaysia, Indonesia and Cambodia. He also led the group
through a successful privatisation of Yeo Hiap Seng (Malaysia) in 2012 and
streamlined the group's operations.

"The
board is deeply appreciative of Yik Min's leadership and transformation of YHS
since he became chief executive," said chairman Koh Boon Hwee.

"He had
indicated his desire to retire by the end of 2014, but when Melvin could not
join YHS until January 2015, he agreed to postpone his retirement for four
months to allow for an overlap and an orderly handover of duties.

"He
clearly has his heart in the company and I know our people will miss his mentorship
and guidance."

Mr Koh said:
"At the same time, we are fortunate to welcome a person of Melvin's
intellect and experience to the leadership position in YHS.

"With a
properly planned handover, we look forward to a seamless leadership transition,
and for Melvin to build on the foundation laid, especially the new plants
coming up in Indonesia and Cambodia, and take YHS to yet another level."

Prior to
joining YHS, Mr Teo has served as the president director of PT Bank DBS
Indonesia since October 2012, and was chief executive of DBS Bank (China) from
2010 to 2012.

Before
joining DBS Bank in 2005, he held a number of positions at Standard Chartered
Bank and Bank of America.

THE proposed
changes to the resale price index for HDB flats have their merits but may be
construed as favouring property developers ("HDB resale price index to be
revised"; last Thursday) - coming in the wake of an appeal by the Real
Estate Developers' Association of Singapore for more government support
("Property sector 'needs govt support' "; Nov 27).

The index
has been declining since the second quarter of last year because of the
property cooling measures and general weakening of the global property market.

The proposed
changes to the index may cause it to rise initially, given that newer flats -
which will be included in the index - tend to sell at marginally higher prices
than older ones.

While this
could be advantageous to real estate developers, it could mislead the public
into thinking that the property market is recovering, causing people to rush in
to make purchases instead of waiting for prices to fall further.

I propose
that changes to the index be delayed until after the readings have stabilised
and flattened out over a number of quarters.

Alternatively,
the new index could be launched separately, and the old one phased out
gradually as it loses its relevance.

The changes
to the index components are not trivial. Index readings from the past should
not be compared to those on the new index.

In light of India's plan to
develop smart and sustainable cities, coupled with Singapore's experience and
expertise in urban development and city planning, International Enterprise
Singapore (IE Singapore)on
Mondaysigned
a memorandum of understanding (MOU) under which the Republic will masterplan
the new capital city for Indian state Andhra Pradesh, as well as its
surrounding region.

Development, 10 times
the size of S'pore, will be a state's new capital

Source: Straits Times / Top of The News

IN ONE of
its most ambitious urban planning ventures to date, Singapore will help design
and develop a world-class city area in southern India. The city, which will
sprout across an area where 17 villages currently sit, will serve as the new
capital of Andhra Pradesh, whose Chief Minister has tried to make the state an
IT hub.

The state is
poised to lose current capital Hyderabad after the province was split earlier
this year. It has asked Singapore to help it build a spanking new one.

The
development, the single largest infrastructure project attempted by Singapore
in India, will take shape in three or more stages. There will be a master plan
for 7,325 sq km of a state capital region - 10 times Singapore's own size. The
project will have a 125 sq km core and an 8 sq km development where Singaporean
companies will build up utilities.

An agreement
was signed yesterday between International Enterprise Singapore and the
Infrastructure Corporation of the Andhra Pradesh government to prepare the
masterplan and develop the new city.

Singapore
will also train Indian government officials in urban development and
governance.

"Singapore
is delighted to be Andhra Pradesh's partner in masterplanning and developing
its new capital city and surrounding region. A good masterplan lays a strong
foundation, and its effective implementation, beginning with the seed
development, will ensure the city develops sustainably into a vibrant
political, economic and cultural centre of the state," said Mr S. Iswaran,
Minister in the Prime Minister's Office and Second Minister for Home Affairs
and Trade and Industry.

He was
speaking in Hyderabad after witnessing the signing of the agreement, alongside
Andhra Pradesh Chief Minister M. Chandrababu Naidu.

The two
sides plan to complete the masterplan within six months and Mr Naidu promised a
"world- class capital" with uninterrupted power and modern amenities.

Andhra
Pradesh is developing a new capital city, which is expected to cost 1 trillion
rupees (S$21.4 billion), after it was bifurcated in June this year and a new
state, Telangana, carved out from it.

Hyderabad,
among the top 10 Indian cities, will remain a joint capital but eventually go
to Telangana after 10 years.

Mr Naidu was
chief minister of the undivided state of Andhra Pradesh for over a decade
starting in 1995. He put Hyderabad on the global IT map, inviting software
majors like Microsoft to set up development facilities.

Ties between
Singapore and the state of Andhra Pradesh have continued to be strong, with Mr
Naidu travelling to Singapore in November this year to get a first-hand look at
the development model and urban planning and governance expertise.

As a part of
the plan announced last night, the Centre for Liveable Cities and Singapore
Cooperation Enterprise will also help Andhra Pradesh by providing training
programmes for officials of the state government.

Hudson Pacific agreed to pay $1.75 billion in cash for the properties and the rest in stock, giving Blackstone about a 48 percent stake in the real estate investment trust, the companies said in a statement today. The deal will roughly double the asset base of Los Angeles-based Hudson Pacific.

“This is a once-in-a-generation opportunity,” Victor Coleman, chairman and chief executive officer of the REIT, said on a conference call today. “We’ve been patient waiting for this opportunity.”

Blackstone has been selling assets from its 2007 acquisition of Equity Office Properties Trust as occupancies increase and rents recover from the real estate crash. The Hudson Pacific transaction marks the New York-based firm’s biggest sale of office buildings since just after the $39 billion Equity Office takeover, when it flipped many of the properties to reduce debt.

The buildings total 8.2 million square feet (761,000 square meters) and are located in the San Francisco area and Silicon Valley. Those areas were among the top three markets in the U.S. for office-rent growth in the third quarter, as technology tenants drive leasing demand, according to Reis Inc.

Biggest Landlord

The deal would make Hudson Pacific the largest publicly traded office owner in Silicon Valley, ahead of Boston Properties Inc., according to an investor presentation.

The properties are located in cities south of San Francisco, such as Redwood Shores, Palo Alto and San Jose. The deal doesn’t include Blackstone’s downtown San Francisco holdings, such as 100 Montgomery St. and the landmark Ferry Building, Mark Lammas, Hudson Pacific’s chief financial officer, said in a telephone interview. The Ferry Building was acquired in the Equity Office takeover, while 100 Montgomery was a later purchase.

The acquisition, expected to close in the first half of 2015, is the biggest yet for Hudson Pacific, which was incorporated in 2009 and went public a year later. Coleman, who founded the REIT’s predecessor company, is the co-founder and former president of Arden Realty Inc., which was sold to a unit of General Electric Co. in 2006. He has been trying to bring a National Hockey League team to Seattle.

Hudson Pacific, with a market value of about $1.9 billion, currently owns 27 properties totaling 6.4 million square feet, excluding land that can support another 1.9 million square feet, according to its website. The buildings are in Northern and Southern California and the Seattle area.

Lease Expirations

The buildings in the deal have occupancies averaging about 80 percent, with about 60 percent of leases expiring in the next three years, Coleman said on the conference call.

Hudson Pacific expects costs of about $85 million to lease up the properties, including tenant-improvement allowances, broker commissions and renovations, Coleman said. The company is exploring sales and joint ventures of existing assets to help finance the acquisition, and doesn’t expect to sell any of the assets it’s buying from Blackstone, he said.

Blackstone will be required to hold its shares in Hudson Pacific until the end of 2016, Coleman said. The private-equity firm will gain three board seats at the REIT. It will retain some office assets in Marin County and San Francisco, Jon Gray, Blackstone’s global head of real estate, said on the call.

Ongoing Presence

By taking a stake in Hudson Pacific, Blackstone can still benefit from leasing demand and rent growth in Northern California, where new construction is muted, Gray said.

“The Northern California supply picture is attractive,” Gray said on the call. “This is a market where we want to have an ongoing presence and stake. Two plus two equals five.”

Blackstone owns about 50 million square feet of office space in the U.S., including the properties being sold to Hudson Pacific, said Frank Cohen, a senior managing director at the firm.

After the sale, Blackstone will hold about 10 million square feet of former Equity Office buildings, including in West Los Angeles and Boston, that it’s likely to sell by the end of next year, Cohen said.

Blackstone in November agreed to sell a 42-story office building on Manhattan’s Bryant Park to an Ivanhoe Cambridge venture for about $2.25 billion, according to two people with knowledge of the deal. The sale would be the largest of a whole U.S. office property since a group led by Boston Properties purchased the General Motors Building in New York for a record $2.8 billion in 2008, according to Real Capital Analytics Inc.

In September, Blackstone sold five office buildings in the Boston area to investors led by Oxford Properties Group, a unit of the Ontario Municipal Employees Retirement System, for about $2.1 billion.

Los Angeles Mayor Eric Garcetti plans to require owners of more than 1,500 pre-1980 buildings to retrofit them against strong earthquakes at a cost of “billions and billions of dollars,” he said today.

Owners of buildings with so-called soft ground floors, such as parking garages and large retail display windows, would pay about $5,000 per tenant unit to strengthen the structures against earthquakes, while owners of potentially brittle concrete buildings built before 1976 would pay between $10 and $15 per square foot for upgrades, said Lucy Jones, Garcetti’s adviser on seismic issues.

The second-largest U.S. city also plans to prepare for a catastrophic earthquake by developing an alternative water supply with seawater and drainage discharge to fight fires and by building a citywide Wi-Fi network with solar power, Garcetti said. Those measures are part of the multibillion-price tag for the seismic readiness, Garcetti said, adding that he had no more specific estimates.

“This is the most comprehensive step toward earthquake preparedness that the city of Los Angeles has ever undertaken by far,” Jones said at a city hall press conference.

In 1994, the magnitude 6.7 Northridge earthquake toppled freeway interchanges, flattened buildings and caused about 60 deaths and more than $40 billion in property damage.

The Northridge quake occurred along a fault in the San Fernando Valley. A seismic event along the San Andreas Fault, which cuts a diagonal line northeast of Los Angeles, could be far more destructive, Jones and Garcetti said.

Water Supply

Such an earthquake could cause 1,600 fires in the city and render 280,000 homes and apartments uninhabitable, while severing the region’s water supply from Northern California for as long as six months, Jones said.

Costs for the building retrofits, to be required within five years for buildings with soft ground floors and 25 years for concrete buildings, will be borne by their owners, Garcetti said. City officials are exploring ways to protect tenants from significant rent increases resulting from the costs, he said.

Garcetti said he can implement portions of his earthquake plan on his own, such as the Wi-Fi measure, while the rules pertaining to building owners will need Los Angeles City Council approval.

Bill Braswell is staying put in his Virginia home even though he could sell it for 10 times what he paid in 1980 and some of his retired friends are moving to warmer climates.

“I’m on boards and commissions and I enjoy that brain activity, so no, I don’t want to move to South Carolina or Florida,” said Braswell, 69, a retired federal civil servant, who lives alone in a four-bedroom Tudor home in Arlington. “I’m thinking of putting an elevator in so I can stay.”

Older homeowners have emerged as the pillar of the housing market following the collapse in 2008. The homeownership rate for Americans age 65 and over has remained at 80 percent while dropping for every other age group. Seniors typically have less mortgage debt than younger homeowners, more wealth than they had four years ago, and longer lifespans than a generation ago. So they’re staying in the housing market rather than downsizing into rentals or moving to independent senior centers.

“This group has been a ballast for the market,” said Chris Herbert, acting managing director at the Joint Center for Housing Studies at Harvard University. “If not for them, we would have seen a much lower homeownership rate overall, more homes on the market and more weakness.”

The homeownership rate -- the number of owner-occupied homes divided by the number of households -- was 80 percent in the third quarter for those 65 and over, little changed from the same period in 2008, according to Census Bureau data. Those under 35 have seen the biggest decline in homeownership, with a 12 percent drop to 36 percent, the data show. In 1982, the homeownership rate of every age group was higher than it was in 2013 -- except for those 65 and over.

Net Worth

These Americans better withstood the financial crisis. They were more likely to have paid off their mortgage, less likely to face a job loss since many were retired, and positioned to reap gains in the rising stock and bond markets.

“Older homeowners on average got less caught up in subprime,” said Chris Mayer, a real estate professor at Columbia University Business School in New York.

The median net worth for those 65 to 74 increased 5 percent to $232,100, the biggest gain for any age group, from 2010 to 2013, according to the Federal Reserve’s Survey of Consumer Finances.

“They have a quadruple bonus -- they benefited from real estate, the best in equity and bond returns, plus higher GDP per capita growth well before the crisis during the 1980s and 1990s,” said Amlan Roy, head of global demographics and pension research for Credit Suisse Group AG’s investment bank in London. “It’s unlikely to repeat.”

Homebuyers

The percentage of older homeowners with mortgages has increased in the past decade, as has the amount they owe, partly because of refinancing and making smaller down payments, the Consumer Financial Protection Bureau said in May. In 2010, about 40 percent of those over 65 were making house payments compared with more than 70 percent of homeowners age 50 to 64, according to a report earlier this year by the joint center for housing.

As home prices have increased 21 percent since 2012, more older Americans are able to sell and buy another home rather than rent. The biggest jump in buyers this year was for the 65-to 74-year-old group, rising to 13 percent from 10 percent of all buyers from a year earlier, data from the National Association of Realtors show.

“They want to remain as homeowners now because it represents stability so they don’t have to deal with generating fluctuating payments for rent,” Mayer of Columbia said.

Swim Team

The percentage of renters who are 65 and over stayed the same at about 12.5 percent in 2013 compared with a decade ago, Census Bureau data show. For 55-year-olds to 64-year-olds, the percentage has increased to 12.4 percent from 8.5 percent.

More seniors are opting for homes within walking distance of urban centers that don’t require a car, said Michelle Winters, a visiting fellow for housing at the Urban Land Institute. And they want to be in places that are multi-generational and not just dedicated to retirees, she said.

Braswell, the former civil servant, said he wants to stay in his home because of the connections he has in his community. He’s been retired for 11 years and receives Social Security as well as a pension from the federal government. He paid his mortgage off about 20 years ago.

Last year, 75 percent of remodelers said they’re helping seniors stay in their homes by installing grab bars in bathrooms and higher toilets, said Stephen Melman, director of economic services at the National Association of Home Builders.

Improving Health

“As health is improving, people are able to stay in their own homes longer with these adjustments, whereas before we might have seen them moving out to nursing homes or in with family members,” said Danielle Hale, director of housing statistics at NAR.

In 2000, someone who was 65 was expected to live another 17.6 years compared with 19.2 years for someone that age in 2010, Census Bureau data show.

While older Americans are propping up the homeownership rate, they’re not helping the housing recovery as much as younger people would, said Celia Chen, a housing economist at Moody’s Analytics Inc. First-time buyers are more likely to stimulate homebuilding and economic activity, she said.

If more first-time buyers don’t return to the market, older owners or their estates could be stuck with homes when they finally try to sell, said Dowell Myers, a demographer and professor at the Sol Price School of Public Policy at the University of Southern California. First-time buyers accounted for about 33 percent of home purchases this year, the lowest share since 1987, according to a NAR survey released last month.

“The younger generation at present isn’t up to the task,” Myers said. “Too often we think millennials have their own problems, but they’re a problem for everyone older than they are.”

Braswell, who was in the Navy and still swims five days a week with a team and a coach, said he plans to live in his house for at least another decade.

“It’s going to be a while yet before they come and tear this house down,” he said.

China’s residential building boom is petering out, with the effects seen from slumping steel and cement prices, to electricity use, rail-freight traffic and retail sales.

The drag will be long lasting with home completions set to fall by 1 to 3 percent annually from next year to 2025 after almost tripling in 13 years, according to Beijing-based research company Gavekal Dragonomics. A once-in-a-generation shift in demand for housing and an overhang of supply suggests policy makers can cushion the effect with interest-rate cuts such as the one announced Nov. 21, not reverse it.

“The turning point has come,” said Wang Tao, chief China economist at UBS Group AG in Hong Kong. “Construction has to come down so that means growth has to slow, and therefore steel demand, cement demand, energy consumption, mining production, appliances, automobiles -- everything has to come down.”

The challenge for Premier Li Keqiang: Services and consumption aren’t picking up the slack quickly enough, leaving China set for its weakest full-year expansion since 1990. Increasing evidence the slowdown is structural, not cyclical, is playing out on commodity markets and leaves the U.S. shouldering prospects for a pickup in 2015 global growth.

Bloomberg’s monthly gross domestic product tracker shows China’s growth slowed to 6.91 percent in October from a year earlier, the third straight month below 7 percent and the weakest stretch since the start of 2009. Most of the tracker’s seven gauges -- industrial production, electricity production, passenger traffic, railway freight volume, investment (CNFAYOY), retail sales and exports -- are either slowing or falling.

Universal Importance

Housing’s influence on the economy is pervasive, driving sales of everything from cement to steel, electrical appliances, furniture and cars. Its contribution to China’s growth and thereby to global expansion make it “the most important sector in the universe,” Jonathan Anderson, former chief economist for emerging markets at UBS who now runs Beijing-based Emerging Advisors Group, wrote in a 2011 research note.

Real estate and construction accounted directly for 15 percent of 2012 GDP, a quarter of fixed-asset investment, 14 percent of urban employment and about 20 percent of bank loans, the International Monetary Fund said in a July report. About 39 percent of government revenue was related to the property industry last year, Nomura Holdings Inc. says.

Signs of property’s reversal are evident from a 10 percent slump in home sales in the first 10 months of 2014, triggered by waning investor demand and less need for upgrading to larger dwellings, both pillars of the decade-long boom. Prospects for a recovery are damped by a supply overhang after the building binge that accelerated when the government spurred a record borrowing spree in response to the global financial crisis.

Economic Fallout

The fallout is rippling across the economy. Industrial production (CHVAIOY) in October expanded 7.7 percent from a year earlier, the second-weakest pace since 2009, while retail sales gained the least in eight years. Investment in fixed assets grew 15.9 percent in January-October, down from a 20.1 percent pace in the same period in 2013.

Electricity-output growth slowed to an average 4 percent in January through October, less than half the pace of the prior five years. Freight-traffic volume on the nation’s rail network slumped 7.5 percent in October from a year earlier, the 10th straight decline, the longest losing streak since the global slowdown of 2008-2009. Fewer coal shipments account for much of the drop.

‘All Related’

“There has been a slowdown in industry and industries have been a big consumer of coal,” said Wei Jiangping, a market manager at coal producer Inner Mongolia Yuan Xing Energy Co. (000683)“It’s all related: The property industry slows, and that leads to a slowing of demand from the cement and glass industries.”

Real estate and construction’s contribution to GDP will probably slide to 28 or 29 percent by the end of the decade from about 33 percent this year and more than 34 percent in 2011, said Rosealea Yao, an analyst at Gavekal Dragonomics in Beijing.

Per-capita living space has increased to almost 30 square meters (323 square feet) per person from about 20 square meters in 2000, approaching the 35 to 40 square meters in most developed countries, she said.

“The room for further increases is quite limited,” she said. “Fewer people will move into bigger houses.”

It will take as many as six years for excess land supply to be digested in third- and fourth-tier cities, four years in second-tier and two years in first-tier cities, Nomura says.

Leveling Off

Even a mere leveling-off of property investment will drag on growth and construction-related commodities including steel, copper and cement, said Patrick Chovanec, chief strategist at Silvercrest Asset Management Group LLC in New York.

“You don’t have to have a big crash to have a big impact on the growth rate,” said Chovanec, a former associate professor at Beijing-based Tsinghua University. “If you just build the same number of condos and villas and apartments that you did last year but no more then it’s not a contributor to GDP growth.”

Bloomberg’s China Real Activity Index for such new drivers expanded 11.9 percent in October from a year earlier, while a gauge of the “old” forces including real estate investment, ferrous-metal ore production and output of state-owned enterprises expanded 5.3 percent, the slowest since May 2009.

Online Boom

While retail-sales data points to a slowdown, electronic commerce is booming, with online sales rising 18 percent in the third quarter, according to Shanghai-based iResearch Consulting Group. Online shopping surged 50 percent from a year earlier, led by Alibaba Group Holding Ltd. (BABA)’s TMall with a 58 percent share, while travel sales jumped 20 percent.

Because service industries, which replaced manufacturing and construction as the biggest part of the economy last year, require about 30 percent more jobs per unit of GDP than industry, the nation’s economic-growth rate can slow while still providing ample employment, says Stephen Roach, former chief economist at Morgan Stanley.

“Most people around the world are very negative on China because they see GDP growth slowing,” said Roach, a senior fellow at Yale University’s Jackson Institute of Global Affairs and author of “Unbalanced,” which explores the links between China and the U.S. “China is shifting its economic growth into more labor-intensive services industries and that’s a big deal. It doesn’t matter if GDP growth is slowing if employment growth is increasing, and it is.”

Staff Crunch

Roach said slower GDP growth accompanied by services-creating structural changes will be good for China.

On the outskirts of Beijing, massage and facial parlor owner Yao Yanming says business is booming and it’s difficult to find local staff willing to work for 3,000 yuan ($487) to 5,000 yuan a month after commission income on sales of products.

“Young Beijingers have a higher salary expectation,” she said. “Older Beijingers already have enough money and just want to rest at home. It’s hard to find migrant workers with an adequate education level.”

Yao said she remains optimistic about business prospects and recently moved to a new location and upgraded equipment, including adding a new steam massage.

“China is making a tentative transformation to a more consumption-driven economy,” said Tao Dong, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong. “That’s just being masked by the bad news.”

Policy Support

Exports (CNFREXPY) have also helped underpin this year’s expansion even as rising wages erode the competitive advantage of China’s factories. China’s overseas shipments climbed 4.7 percent in November from a year earlier, down from 11.6 percent growth a month earlier.

Policy makers are trying to support 2014 growth close to the target of about 7.5 percent without adding to risks from a surge in credit after the financial crisis. The central bank cut interest rates last month for the first time since 2012 after a Bloomberg monetary conditions index for China showed the tightest level in data going back to 2003.

Regional outcomes are diverging, with the industrialized northeast faring worst. For January through September, all 31 provinces and municipalities are missing expansion targets, according to data compiled by Bloomberg from governments and state media.

2015 Growth

As for next year, Premier Li will endorse 7 percent as the GDP growth target, according to analysts polled by Bloomberg. While that compares with the 10 percent average pace of the past 30 years and would be the slowest expansion since 1990, it’s about triple the rate the IMF expects for advanced economies.

Property’s downturn will slice 1.2 to 1.5 percentage point off growth this year and 1.5 percentage point next year with any significant rebound later unlikely, says UBS’s Wang.

The “new normal” for housing doesn’t mean there won’t be short-term up-cycles, and the central bank’s recent interest-rate cut is among factors supporting a short-term rebound in the price of houses and steel, said Gavekal Dragonomics’s Yao.

“But this is cyclical,” she said. “The underlying trend will be the final say.”